My first ever investment property (I did 200+ since then)

[Tai DeSa]

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $77,000
Cash invested: $102,000
Sale price: $124,000

This was my very first deal. It was a great learning experience. I bought a 5-unit in inner city Philadelphia sight unseen at an auction. One of my tenants killed another one of my tenants shortly after I bought it. I renovated the building, rented it out fully, and eventually sold it by letting the buyer assume my mortgage.

How did you find this deal and how did you negotiate it?

I was an idiot with this one. I had $125,000 burning a hole in my pocket. I wanted to be an investor. I had a bad mentor, who was an auctioneer who told me to bid at his auction. I thought he would guide me well, and so I bid on a 5-unit apartment building in Philadelphia that had a 17% cap rate ON PAPER. I did no due diligence; I didn't see the building; I knew nothing of the area; I had no connections. I bought this on faith and emotion.

How did you finance this deal?

I put down 35% and took out what amounted to a high interest loan for the rest.

How did you add value to the deal?

I renovated the property. I put in great tenants. People in the neighborhood saw that I was making it better. I ended up selling it and recouping my money.

What was the outcome?

I bought it for $77,000, invested $35,000 in renovations, and sold it for $124,000. I learned so many valuable lessons.

Lessons learned? Challenges?

Don't buy properties sight unseen when you are a newbie! Don't buy 100 miles from where you live! Don't buy major fixer-uppers when you have no contractor connections and no construction experience!